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Tag: Food/Beverages/Tobacco

  • Are Cheerios and Quaker Oats safe to eat? Experts weigh in on new pesticide concerns. 

    Are Cheerios and Quaker Oats safe to eat? Experts weigh in on new pesticide concerns. 

    Should you pass on that morning bowl of cereal or oatmeal?

    That’s what some people may be asking in light of a study released this week by the Environmental Working Group, a Washington, D.C.-based nonprofit focused on agricultural and chemical-safety laws in the U.S. The study looked at the prevalence of a pesticide called chlormequat in oat-based food products, including cereals like Cheerios and Quaker Oats. 

    The EWG said it found detectable levels of the chemical in 92% of nonorganic oat-based foods purchased in May 2023.

    “Studies in laboratory animals show that chlormequat can cause harm to the normal growth and development of the fetus and damage the reproductive system,” Olga Naidenko, vice president at the EWG, told MarketWatch. Those risks, the EWG report noted, can include reduced fertility. 

    It has not been proven that the substance affects humans in the same way the studies cited by the EWG found it does lab animals, and there are other studies that have found chlormequat had no effect on reproduction in pigs or mice, or any impact on fertilization rates in mice.

    The EWG is still advocating that concerned consumers buy organic oat products as an alternative, however. 

    “Certified organic oats are, by law, grown without synthetic pesticides,” Naidenko said. 

    Representatives for General Mills
    GIS,
    +1.28%
    ,
    the company that makes Cheerios, and PepsiCo
    PEP,
    -0.92%
    ,
    which owns Quaker Oats, didn’t immediately respond to a request for comment. 

    ‘Any family raising kids or thinking about starting a family should do whatever they can do to avoid chlormequat. It’s not a safe product.’


    — Charles Benbrook, a scientific consultant who focuses on pesticides

    The EWG’s recommendation to go organic was echoed by experts that MarketWatch contacted. 

    Charles Benbrook, a scientific consultant based in Washington state who focuses on pesticides, said he’s an oatmeal eater who chooses organic oatmeal “when I can get it.”

    Regarding chlormequat, Benbrook said, “It’s not a safe product.”

    “Any family raising kids or thinking about starting a family should do whatever they can do to avoid chlormequat,” he said.

    Melissa Furlong, an assistant professor of environmental health sciences at the University of Arizona, said it’s important to note that chlormequat is not the only pesticide that is found in oat-based cereals. There’s still much we need to learn about the health effects the substance might have on humans, she added.

    “That’s not to say it isn’t the worst [pesticide]. We don’t really know,” Furlong said. 

    Chlormequat has not been approved for use on food crops grown in the U.S., according to the EWG, but it can be found in oats and oat products from other countries. Under the Trump administration, the Environmental Protection Agency started allowing imports of such products into the U.S., the EWG noted, which is why chlormequat can be found in some cereals sold in this country.

    The EPA is considering approving chlormequat for use on crops grown in the U.S., according to the agency’s website. In a call for public comment on its proposed decision, the agency said, “Based on EPA’s human health risk assessment, there are no dietary, residential, or aggregate (i.e., combined dietary and residential exposures) risks of concern.”

    The EPA didn’t respond immediately to a request for comment.

    For her part, Furlong said that while she usually buys organic oat products, she isn’t rigid about it — and she might still buy the occasional box of Cheerios.

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  • McDonald’s misses revenue target as it cites impact from Middle East war

    McDonald’s misses revenue target as it cites impact from Middle East war


    McDonald’s Corp.’s stock fell 1.3% in premarket trading on Monday after the fast-food giant missed Wall Street analysts’ estimates for revenue and same-store sales, while citing an impact from war in the Middle East.

    The global fast-food giant said it expects “macro challenges” to persist in 2024.

    McDonald’s
    MCD,
    -0.35%

    said its fourth-quarter net income rose by 7% to $2.04 billion, or $2.80 a share, from $1.9 billion, or $2.59 a share, in the year-ago quarter.

    McDonald’s said the latest quarter’s results included 15 cents a share in one-time charges.

    Breaking those charges out, McDonald’s would have earned $1.95 a share. Analysts expected McDonalds to earn $1.83 a share, according to FactSet data.

    Revenue rose 8% to $6.41 billion, short of the FactSet consensus estimate of $6.45 billion.

    Fourth-quarter global comparable-store sales increased by 3.4%, including a 4.3% rise in the U.S.. Analysts expected same-store sales growth of 4.7%.

    McDonald’s said its comparable sales fell in the Middle East as a reflection of war in the region since Oct. 7.

    All other same-stores sales rose in international developmental licensed markets.

    Total international developmental licensed markets same-store sales rose by 0.7%, well below the result in the previous quarter, which saw a 10.5% increase.

    Looking back at the balance of 2023, McDonald’s said its net income rose by 37% to $8.47 billion.

    Revenue jumped by 10% in 2023 to $25.49 billion.

    Free cash flow for 2023 increased to $7.25 billion from $5.49 billion.

    Before Monday’s moves, McDonald’s stock was up by 10.9% in the past year.



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  • Don’t ruin Thanksgiving by making these rookie mistakes

    Don’t ruin Thanksgiving by making these rookie mistakes

    A friend calls this day “Thanksscrapping.” He may have a point. 

    My favorite Thanksgiving story happened at a dinner on Park Avenue about 20 years ago when a lady with a large bouffant and a genial manner — let’s call her Mrs. Anders — raised a glass. Knowing I grew up in Dublin in a Catholic family, she said: “…and I’d like to raise a glass to Fair Eire and hope that the six counties of Northern Ireland are one day free from the British!” She did not realize that the host’s in-laws were Ulster Protestants. They were not amused.

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  • Orange-juice futures suffer their biggest weekly decline in over 6 years after hitting record

    Orange-juice futures suffer their biggest weekly decline in over 6 years after hitting record

    Orange-juice futures posted a drop of nearly 11% for the week on Friday, the largest such percentage decline since late March 2017, just days after settling at their highest price on record.

    “The weather is good and the hurricane season is almost over,” Jack Scoville, vice president of The Price Futures Group and author of the Grains and Softs Report, told MarketWatch on Friday. 

    The Atlantic hurricane season runs from June 1 through Nov. 30. It can impact crops in the region, and Florida is among the top orange growing states. The season started off strongly but was relatively quiet in October.

    The speculators in the market tried to take profits and “found out that there was no buying interest under the market, so it went down hard,” said Scoville. 

    The most-active January contract for frozen concentrated orange juice posted a weekly loss of 10.6% on Friday, the worst weekly performance since the week ended March 31, 2017, according to Dow Jones Market Data. It settled Friday at $3.4925 a pound on the ICE Futures U.S. exchange, down 1.4%, for the session, after dropping 5.2% Thursday.

    The big mover among the futures contracts is November, said Darin Newsom, Barchart senior market analyst.

    That contract was down around 14% from this past Tuesday’s high of $4.3195, he said. The first notice day, the day buyers of futures contracts receive a notice that a seller intends to make delivery of a commodity, was Nov. 1, he said.

    Given that, anyone holding long futures who didn’t want to take delivery had to get out of their position — leading to a sharp selloff, Newsom explained. The January contract saw some “spillover selling” from the November contracts.

    Prices for frozen orange juice had marked a record high settlement of $4.008 a pound on Oct. 30. They trade a whopping 71% higher year to date, on track for the best year since 2009.

    It’s “hard to buy when a market goes to new all-time highs,” said Newsom.

    Key reasons for the rally are post-COVID demand for vitamin C, and the worst Florida citrus crop since the 1920s, due to a disease called citrus greening, said James Roemer, publisher of WeatherWealth newsletter.

    However, the lack of Florida hurricanes this fall and a potentially large 2024 orange crop in Brazil, the world’s largest producer, are “potentially bearish longer term,” he said.

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  • Junk food is as addictive as alcohol and cigarettes: report

    Junk food is as addictive as alcohol and cigarettes: report

    Apparently, you really can become a junk-food junkie.

    That’s what a new study published by the British Medical Journal says, noting that ultra-processed foods — meaning food that contain “ingredients not available in home kitchens” and that typically have high levels of refined carbohydrates or added fats — are plenty addictive. And they’re on par with alcohol and tobacco, the study notes.

    Specifically, the study says that food addiction — again, closely connected with the consumption of ultra-processed foods — is prevalent in 14% of the adult population. That matches the percentage for alcohol addiction and is just slightly below the percentage for tobacco addiction (18%).  

    The study warns that junk foods like sweets and snacks deliver those carbs and fats to the gut at a speedy rate, contributing to their addictive potential. It’s not unlike how cigarettes “rapidly deliver nicotine to the brain,” the study warns.

    Additives also play a role in making these junk foods so appealing, the study says. That is, they increase sweet and savory tastes. Not surprisingly, the study notes that additives “that aim to improve [flavor] and mouthfeel are also common in cigarettes, including sugar, cocoa, menthol, and alkaline salt.”

    If anything, the study points to issues with food addiction that don’t exist with other addictions since food is a critical part of our lives. “Addictive drugs are not necessary for survival; eating is,” the study says.

    The study says understanding that ultra-processed foods are indeed addictive could “lead to novel approaches” in addressing the issue. It points to several policies that are already being taken across the world, such as levying taxes on sweetened beverages or posting nutritional information on the front of packages.

    MarketWatch reached out to SNAC, a trade group representing snack-food manufacturers, about the study, but didn’t receive an immediate response.

    Americans’ desire to snack doesn’t appear to be abating. In its most recent annual report, SNAC says the annual total sales for salty snacks grew by 15.6% in 2022 to $28.4 billion. Potato chips alone saw 14.5% growth to $7.8 billion in sales.

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  • PepsiCo’s stock climbs after earnings beat consensus and company raises guidance

    PepsiCo’s stock climbs after earnings beat consensus and company raises guidance

    Shares of PepsiCo Inc.
    PEP,
    +0.67%

    rose 2.5% in premarket trading Tuesday, after the beverage and snack giant reported third-quarter earnings that topped consensus and raised its full-year guidance.

    Net income rose to $3.092 billion, or $2.24 a share, from $2.702 billion, or $1.95 a share, in the same period a year ago.

    Excluding nonrecurring items, core earnings per share of $2.25 were ahead of the FactSet consensus of $2.15.

    Revenue grew to $23.453 billion from $21.971 billion, also ahead of the FactSet consensus of $23.413 billion.

    “We are pleased with our performance as our businesses and associates displayed tremendous agility and resilience across geographies and categories in an evolving and dynamic environment,” Chief Executive Ramon Laguarta said in a statement.

    Revenue at Frito-Lay North America rose 7%, while it was up 5% at Quaker Foods North America. PepsiCo Beverages North America rose 8%, while Latin America was up 21% and Europe up 2%.

    Revenue for Africa, Middle East and South Asia fell 6%, while Asia Pacific, Australia and New Zealand and China Region’s revenue was up 4%.

    For 2023, the company revised its core EPS guidance to $7.54 from $7.47 previously.

    “For fiscal year 2024, we expect to deliver results towards the upper end of our long-term target ranges for both organic revenue and core constant currency EPS growth,” said the statement.

    The company’s long-term target ranges for both organic revenue growth — 4% to 6% growth — and core constant currency EPS growth– high-single-digit percentage increase– remain unchanged.

    The stock has fallen 11% in the year to date, while the S&P 500
    SPX
    has gained 13%.

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  • Why McDonald’s is bringing back its McRib for the umpteenth time

    Why McDonald’s is bringing back its McRib for the umpteenth time

    Call it the long goodbye, fast food-style.

    McDonald’s
    MCD,
    +0.27%

    is planning to bring back its beloved McRib sandwich, just one year after giving the porky treat a “farewell tour.” The menu item is set to return next month, according to the company.

    “While it won’t be available nationwide, some lucky fans may find their favorite elusive saucy sandwich at their local McDonald’s restaurants this November,” McDonald’s said in a statement to MarketWatch on Wednesday.

    Not that the news should come as a complete surprise. McDonald’s has always employed a scarcity tactic in marketing the McRib. That is, the key to the sandwich’s appeal has been that it’s never around for long, leaving fans (including Homer Simpson) to devour it while they can.

    As Restaurant Business, a trade publication, observed last year: “If consumers think there is a shortage of a product, or that it won’t be around for long, they will rush out to get it. Think of the Great Toilet Paper Shortage in 2020 and how many people rushed out to get some the moment they thought they might run out.”

    The publication quoted McDonald’s CEO Chris Kempczinski about this approach, particularly in relation to the “farewell tour”: “The McRib is the GOAT of sandwiches on our menu. And so like the GOATs Michael Jordan, Tom Brady, and others, you’re never sure if they’re fully retired or not.”

    By all accounts, the strategy has worked: A Wall Street Journal story once noted that McDonald’s sold more than 60 million of the sandwiches over a three-year period — in spite of the fact (or maybe because of the fact) it’s available in such limited fashion.

    Further proof of the McRib’s success: It has spawned some competition. In 2021, Arby’s released a Country Style Pork Rib sandwich as a limited-time fall offering — and took cheeky aim at McDonald’s in its marketing, referring to the McRib as a “rib-shaped sandwich” (there’s some truth to that — the McRib features a boneless pork patty with no actual ribs).

    Naturally, the McRib’s return has sparked plenty of reaction on social media. One commenter on X (formerly Twitter) referred to the fact the sandwich seemingly has nine lives. Another said that McDonald’s retracting of its “farewell tour” announcement has left them having “trust issues.”

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  • Here’s how the Republican presidential candidates say they’ll whip inflation

    Here’s how the Republican presidential candidates say they’ll whip inflation

    Inflation remains a top concern among Americans, so what do the Republicans seeking President Joe Biden’s job say they’ll do about it?

    MarketWatch asked the 2024 GOP White House hopefuls to give at least three ways that they would address the elevated prices that have blown up many household budgets.

    Most campaigns provided responses, while some didn’t but have offered proposals in other venues. See what they’re all planning below.

    The economy is the No. 1 issue for Republican voters, according to a recent Wall Street Journal poll, which found 36% citing the economy generally and an additional 10% citing inflation.

    MarketWatch contacted the eight contenders who took part in their primary’s first debate, along with former President Donald Trump, who skipped the debate, and two relatively well-known contenders who failed to qualify for the first debate, Larry Elder and former Congressman Will Hurd. They are listed below in order of their ranking in the latest polls, based on a RealClearPolitics moving average.

    Inflation was low when Trump became president, with prices rising less than 2% a year. That was even considered a problem before the COVID-19 pandemic, with inflation often characterized as stubbornly or persistently low. Inflation began to spike in 2021, shortly after Biden took office, due to a global shortage of goods and a huge rebound in consumer demand following the pandemic’s early stages. Economists say massive stimulus by both the Trump and Biden administrations as well as low interest rates fostered by the Federal Reserve helped to push inflation to a 40-year high.

    Biden has stressed that inflation, as measured by the consumer-price index, has “fallen by around two-thirds,” and he and his team have talked up their efforts to lower costs for prescription drugs and insulin, to crack down on junk fees for a range of services, and to use the Strategic Petroleum Reserve to lower gasoline prices. Biden’s re-election campaign didn’t respond to MarketWatch’s request for comment.

    Donald Trump

    “I would get inflation down,” Trump said in a recent interview with NBC’s “Meet the Press,” while saying that “we did a great job with inflation.” His campaign pointed MarketWatch to a number of policy proposals in which Trump himself is quoted.

    Former President Donald Trump walks over to speak with reporters before departing from Atlanta’s airport last month.


    AP

    • The former president says he’ll rein in what he calls Biden’s “wasteful spending,” which Trump says is key to stopping inflation. Trump is proposing to use what’s known as impoundment authority to reduce federal spending. That term refers to the ability of a president to withhold congressionally appropriated funds from their intended use, according to the Committee for a Responsible Federal Budget.

    • Trump also calls for boosting energy output. “When I’m back in the White House, I will immediately unleash energy production, slash regulations, like I did just three years ago, and repeal Biden’s tax hikes to get inflation down as fast as possible, and it will go quickly, so that interest rates can get back under control,” Trump says on his campaign website. “I would get inflation down, because drill we must,” he told “Meet the Press.”

    • A Trump spokesman did not respond when asked for specifics about which Biden-approved tax increases Trump would repeal. The former president and his advisers, meanwhile, have reportedly discussed deeper cuts to both individual and corporate rates that would build on the 2017 Tax Cuts and Jobs Act.

    Ron DeSantis

    Florida Gov. Ron DeSantis, says a spokesman, “will reduce inflation by, among other measures, tackling government spending, unleashing domestic energy and removing burdensome Biden administration regulations.”

    Florida Gov. Ron DeSantis speaks in July during a press conference in West Columbia, S.C.


    AP Photo/Sean Rayford

    • In his economic plan, DeSantis leans heavily into energy policy for addressing inflation. “DeSantis will unleash our domestic energy sector, modernize and protect our grid and advance American energy independence. This will not only increase our economic and national security while reducing inflation, [but] it will also help fuel a manufacturing renaissance that will create jobs, revitalize our communities and improve our standard of living,” says his plan.

    • He told “CBS Evening News with Norah O’Donnell” that, as president, he would “stop spending so much money. We need a president that’s going to be a force for spending restraint, because that’s one of the root causes, with Congress spending so much.” He criticized both Democrats and Republicans for government spending.

    Vivek Ramaswamy

    Republican presidential candidate Vivek Ramaswamy speaks in April at an event in Iowa.


    AP

    “This isn’t complicated,” entrepreneur and author Vivek Ramaswamy said in a recent post on X. “Fight inflation, unleash growth by taking the handcuffs [off] the U.S. energy sector & dismantling the regulatory state.” His campaign didn’t respond to MarketWatch’s request for comment, but his campaign website offers the following proposals:

    • “Drill, frack & burn coal : abandon the climate cult & unshackle nuclear energy.”

    • “Launch deregulatory ‘Reagan 2.0’ revolution: cut > 75% headcount amongst U.S. regulators.”

    • Ramaswamy is also calling for dramatically changing the Federal Reserve, by ending the central bank’s dual mandate of keeping inflation low and maintaining full employment. “Limit the U.S. Fed’s scope: stabilize the dollar
      DXY
      & nothing more,” his campaign site says.

    Nikki Haley

    A spokesman for Nikki Haley’s campaign pointed to a Fox Business interview on Wednesday in which she called for ending the federal gas tax and cutting spending, as well as to her speech Friday in New Hampshire on her economic plan.

    Republican presidential candidate Nikki Haley is a former U.S. ambassador to the United Nations and former South Carolina governor.


    Getty Images

    • “We want to eliminate the federal gas tax completely,” Haley told Fox Business. “We have to get more money in our taxpayers’ pockets.” That tax helps pay for highways, but she said the system isn’t working, echoing a point that some policy analysts have previously made. Biden pushed for temporarily suspending the federal gas tax in 2022, but Congress didn’t provide sufficient support for his proposal. In her economic speech, Haley also promised to cut income taxes for working families and make permanent the tax cuts that small businesses scored in 2017’s GOP tax overhaul.

    • The former U.S. ambassador to the United Nations said members of Congress are “spending like drunken sailors,” as she promised to reduce the federal government’s outlays. “I will veto any spending bill that doesn’t take us back to pre-COVID levels,” she told Fox Business, referring to budgets that date to before the onset of the coronavirus pandemic in March 2020.

    • Haley in her speech Friday pledged to support the U.S. energy industry, as she suggested that Washington has been “stifling it.” She said: “We’ll drill so much oil and gas, families will save big on their utility bills.”

    Mike Pence

    A spokesman for Pence’s campaign pointed to the former vice president’s plan for “ending inflation,” which calls for actions such as reducing the federal government’s spending and changing the Federal Reserve’s job description.

    Former Vice President Mike Pence served as governor of Indiana and as a congressman before becoming Donald Trump’s running mate in 2016.


    AP

    • A Pence administration would “end runaway deficits by freezing non-defense spending, eliminating unnecessary government programs, repealing over $3 trillion in new spending under Biden, and reforming mandatory programs that drive our debt,” the plan says. Earlier this year, he urged “commonsense and compassionate” reforms for programs such as Social Security and Medicaid.

    • Pence wants to end the Fed’s dual mandate, which calls for the U.S. central bank to focus on full employment and stable prices. “Trying to serve two, often contradictory goals has led to wild fluctuation in rates,” his plan says, adding that it’s better to “leave employment policy to the president and Congress.”

    • The former vice president’s plan said he aims to bring supply chains and production “back home,” and that would happen by “removing regulatory burdens, enacting pro-growth tax policies, and ensuring access to abundant American energy.” In other words: “We will fight inflation by making America the best place to do business again.”

    • Similar to his 2024 GOP rivals, Pence blasts Biden’s energy policies, though some of the Democratic incumbent’s stances, such as his approval of the Willow drilling project in Alaska, have also been criticized by environmental groups. Pence’s plan says: “It is time to reverse Biden’s attack on American energy by restarting oil and gas leasing on federal lands, opening the Arctic and offshore regions for exploration
      XOP,
      approving safe transportation of oil and gas, mining rare earth minerals, and rejecting climate change hysteria that is causing U.S. energy
      XLE
      production to fall.”

    Chris Christie

    Former New Jersey Gov. Chris Christie addresses a New Hampshire audience in April.


    AP Photo/Charles Krupa

    Chris Christie’s White House campaign didn’t respond to MarketWatch’s requests for comment, but the former New Jersey governor has emphasized that reducing government spending will help tame inflation.

    “The out-of-control government spending has created this inflation,” Christie said in June during a CNN town hall. “I mean, even Larry Summers, who I don’t agree with much on, former Democratic Treasury secretary, warned Joe Biden, ‘Don’t do this spending. It’s going to cause the inflation.’ So, first, we need to bring spending down, and we’ve talked about that before.”

    Related: Larry Summers has a new inflation warning

    Tim Scott

    U.S. Sen. Tim Scott pointed to reducing the federal government’s spending and repealing one of Biden’s signature legislative packages, when asked about how he would address inflation.

    Tim Scott, a U.S. senator from South Carolina, speaks last month during the presidential debate in Milwaukee.


    Getty Images

    • Scott, from South Carolina, said in a statement that he would aim to “snap non-defense discretionary spending back to the pre-COVID 2019 baseline.” He described that as stopping Democrats from “turning the temporary pandemic into permanent socialism.”

    • Scott said he would rescind the Inflation Reduction Act, which is Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations. “The Inflation Reduction Act actually increased inflation and the only thing it reduced was money in our pockets,” he said in his statement. “Cutting that off and restoring tax cuts and eliminating the tax increases would go a long way to having the kind of stimulative impact in our economy and controlling spending.”

    • Scott called for stronger economic growth. “We have to also grow our economy somewhere near 5% consistently,” he said, adding that could create 10 million jobs. The U.S. economy grew by nearly 6% in 2021 after contracting in 2020 as COVID hit, then it expanded by about 2% in 2022.

    Related: Republican presidential candidate Tim Scott says he wants to put the focus on tax cuts

    Asa Hutchinson

    Former Arkansas Gov. Asa Hutchinson blames “excessive federal spending” for leading to inflation when giving speeches, and outlines a plan for “fiscal responsibility” on his campaign site.

    Asa Hutchinson, governor of Arkansas from 2015 until this year, speaks at an Iowa event in April.


    Scott Olson/Getty Images

    • “Restore discipline by reducing federal government size, cutting spending, balancing the budget, and lowering the deficit to tame inflation,” it states.

    • When Hutchinson was governor, he signed a $500 million tax-cut package, saying “it could not come at a better time with the continued challenge of high food and gas prices.” That was in August 2022. On his campaign website, he repeats a call to cut taxes and “reduce regulations to boost the private sector and enhance wages for American workers.”

    Hutchinson’s campaign did not respond to a request for comment from MarketWatch.  

    Doug Burgum

    North Dakota Gov. Doug Burgum, a GOP presidential hopeful, speaks at the Iowa State Fair in August.


    Brandon Bell/Getty Images

    North Dakota Gov. Doug Burgum’s website says that as president he would “get inflation under control, cut taxes, lower gas prices
    RB00,
    +0.31%
    ,
    reduce the cost of living and help people realize their fullest potential.” It doesn’t provide specifics.

    A spokesman for Burgum’s White House campaign didn’t respond to MarketWatch’s requests for comment. A spokesman reportedly told the New York Times that the campaign will roll out its vision and plans on its own timeline.

    Larry Elder

    Larry Elder, a conservative radio host and a gubernatorial candidate in California in the failed 2021 recall of Democratic incumbent Gavin Newsom, said he views energy and tax policy and a constitutional amendment as ways to whip inflation.

    Larry Elder is a conservative radio host and former gubernatorial candidate in California.


    AP

    • “Reverse the war on oil
      CL00,
      +0.93%

      and gas
      NG00,
      -2.65%

      ; permit drilling in Anwar [Arctic National Wildlife Refuge]; authorize the Keystone Pipeline; reverse the Biden restrictions on drilling on federal lands; and encourage nuclear energy
      NLR,
      ” Elder said in a statement.

    • “Encourage an amendment to the Constitution to set spending to a fixed percent of the GDP,” he also said.

    • Elder said the reduction in spending forced by that constitutional amendment would “coincide with a steep reduction in personal and corporate income taxes,” offering further help to Americans with stretched budgets.

    Will Hurd

    2024 Republican presidential hopeful Will Hurd, a former Texas congressman, speaks in Iowa in July.


    AFP via Getty Images

    Former U.S. Rep. Will Hurd of Texas announced his candidacy in June but so far hasn’t made it to the debate stage. In his campaign-launch video, he labeled inflation “still out of control.”

    • In a post on X in June, Hurd called for reining in spending. “You cannot be putting government funds into, at a time where you’re seeing the rising inflation,” he said.

    • And he said tax hikes are a nonstarter when inflation is high. “The worst time to talk about increasing taxes is when everybody’s hurting from inflation.”

    • Hurd also said the deficit should be addressed, to “start bending the curve back on the debt.”

    Hurd’s campaign did not respond to a request for comment from MarketWatch.

    Now read: Republican presidential debate: Candidates could win with a clear economic message about the ‘crisis among working people’

    And see: As Biden joins UAW picket line, poll shows Democrats’ edge over GOP on ‘caring about people like me’ has vanished

    Jeffry Bartash contributed.

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  • Instacart stock indicated to soar 30% at its open

    Instacart stock indicated to soar 30% at its open

    Shares of Instacart
    CART,

    are set to receive a warm reception in their Wall Street debut, as early indications are for the grocery delivery app’s stock to open about 30% above where the initial public offering priced. While the stock isn’t expected to trade for a while, perhaps hours, the first indication from the Nasdaq was for the first trade to be around $39.00, while the IPO priced at $30 a share, according to FactSet data. At that price, the company, which is officially named Maplebear Inc. and doing business as Instacart, would be valued at about $13.2 billion, based on 338.8 million common shares outstanding (as-converted, fully diluted). In last week’s high-profile IPO of semiconductor-design company Arm Holdings PLC, the stock’s
    ARM,
    -4.59%

    first trade was 10% above the IPO price, but it closed 24.7% above the IPO price on the first day.

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  • A 1-liter stein of beer at Munich’s famed Oktoberfest will cost nearly $15 this year

    A 1-liter stein of beer at Munich’s famed Oktoberfest will cost nearly $15 this year

    When merry revelers from around the world lift their beer steins to mark the start of Oktoberfest in the Bavarian capital Munich, they might want to sip slowly, given they will now be paying €13.75 ($14.67) per liter.

    That’s based on an analysis from a team at Berenberg, who provided this chart showing the soaring cost of beer at the Munich Oktoberfest compared with other consumer and food inflation measures:

    The globally famed festival is due to kick off this Saturday. And while the cost keeps rising, the celebratory large glass of Bavarian beer —- served in a stoneware mug known as a Maß, or stein — often doesn’t seem to reach the required 1-liter mark once the foam has settled, notes Holger Schmieding, chief economist, who led the report.

    “Do not even try to compare the price per liter to the cheap beer cans available at the discount retailers nearby. The difference might make some crave a stiffer drink to drown the financial pain,” he and his team said.

    Citing data from German price statistics dating back to 1991, Berenberg’s economists said the price of an Oktoberfest beer has soared at an annual average rate of 3.9%, well above the annual 2% rise in inflation and the 1.8% rise paid for beer sold by retailers.

    However, more recently the pain may have eased some. Schmieding said the price of that beer rise versus 2022 is just 4.2%, which is below the average food price rise of 9%. And German wages rose 6.6% on an annual basis in the second quarter of this year, meaning some might this year find those steins slightly little more affordable, once they get past the sticker shock.

    The country has felt the fallout from Russia’s invasion of Ukraine and soaring energy and food prices, which propelled inflation to a postwar high of 7.9% in 2022. Wage earners are currently recouping some of lost purchasing power, but Schmieding and his team warn this won’t last.

    “In a lagged response to lower headline inflation and the modest rise in unemployment that we project for the next two quarters, German wage gains will likely slow down to 4% yoy by the time of the next Oktoberfest in September
    2024, and the less volatile rise in beer prices at the party will likely outpace inflation and wages again,” they wrote.

    The European Commission recently forecast that Germany, the bloc’s biggest economy, will be the only major one to see growth contract this year, with a forecast for gross domestic product to fall 0.4% in 2023. Weak industrial output has been a major factor in sluggish growth. Inflation for the EU bloc is expected to fall to 2.9% next year, slightly under the 2.8% previously forecast.

    The European Central Bank on Thursday hiked its deposit rate by 25 basis points to an all-time high of 4% as it battles inflation for the region which it expects will average 5.6% this year, well above its 2% target.

    Schmieding and the team say Germany, however, does not deserve the “sick man of Europe” title, which it last held in the 1990s, that some have slapped on it.

    The country is, though, “nursing a collective hangover” after celebrating its “golden decade” between the global financial crisis and the pandemic onset too hard, with early retirement plans, expanded welfare benefits and too much dependence on Russian energy, they say.

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  • Howard Schultz steps down from Starbucks board of directors

    Howard Schultz steps down from Starbucks board of directors

    Starbucks Corp. on Wednesday said former Chief Executive Howard Schultz is stepping down from its board of directors, capping a nearly 40-year career during which the company grew from a handful of stores in Seattle into a global coffee chain.

    Schultz’s retirement from the board, which ends his involvement in the company’s leadership, took effect Wednesday and was part of a planned transition, the coffee chain said. Schultz stepped down as Starbucks
    SBUX,
    +0.72%

    chief executive in March.

    The company on Wednesday also said that it had elected Wei Zhang to its board of directors, effective Oct. 1. Zhang was most recently a senior adviser to Chinese e-commerce giant Alibaba Group
    BABA,
    -0.75%

    and also held leadership positions at News Corp China and CNBC China.

    Shares of Starbucks were down 0.7% after hours on Wednesday.

    Starbucks said Schultz “will now turn his attention with his wife, Sheri, to focus on a range of philanthropic and entrepreneurial investments to create greater opportunity, accessible to all.” The company noted that the two were co-founders of the Schultz Family Foundation in 1996, and of the emes project.

    Although he was not technically the founder of the coffee chain, Schultz became the modern face of it. Schultz joined Starbucks in 1982 as its director of operations and marketing. After a brief hiatus from the company, he returned in 1987 as chief executive and bought the business with backing from local investors, according to a biography on the Starbucks website. The chain went public in 1992.

    As the chain’s footprint expanded beyond the U.S., Schultz stepped down from the CEO role in 2000 but returned in 2008. He retired from Starbucks in 2018, then came back as interim chief executive and board member last year.

    Over those years, Starbucks has banked on China for international growth — even as that country’s economy remains turbulent following the postpandemic reopening. It also added food and cold and customizable drinks to its menus and built out its mobile-ordering infrastructure.

    The company has branded itself as a progressive employer and a supporter of social justice. But over the past two years, the company, and Schultz in particular, have faced criticism over the handling of employees who were trying to unionize. Union members have accused the chain of unfair labor practices, retaliation for organizing and delaying contract negotiations, leading to deeper scrutiny from lawmakers.

    “We hope this is an opportunity for Starbucks to change course and leave their union-busting behind them,” Starbucks Workers United, the union representing those workers, said Wednesday in a tweet.

    Still, even as inflation has eaten into consumer savings, Schultz said coffee has remained an “affordable luxury” for many customers. And Starbucks management said that younger, loyal consumers and customizable drinks would help sustain demand.

    According to a filing on Wednesday, Schultz will still be connected to the company in other ways. Starbucks said it would amend Schultz’s retirement agreement from 2018 and continue to provide him and his spouse with security services.

    “The security services will be provided for a period of 10 years and will be evaluated on an annual basis,” the filing said. “In recognition of Mr. Schultz’s leadership as the company’s founder and chairman emeritus, the company will also provide Mr. Schultz with the reimbursement of his monthly healthcare insurance premiums.”

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  • Canopy Growth stock soars on heavy volume again, amid cannabis investor optimism over possible favorable legislation

    Canopy Growth stock soars on heavy volume again, amid cannabis investor optimism over possible favorable legislation

    Shares of Canopy Growth Corp.
    CGC,
    +22.61%

    shot up 21.7% toward a near four-month high in very active afternoon trading, putting them on track for the fifth double-digit percentage gain in seven sessions. The stock has rocketed 130% over the past seven session. Trading volume was 107.7 million shares as of Friday afternoon, to mark the fourth 100+-million-share volume day in the past six sessions, while the average volume over the past 30 days was about 36.3 million shares. The stock’s surge comes as Senate Banking Committee chair Sherrod Brown said Wednesday that there is “an agreement imminent” on the SAFE Banking Act, according to a Politico report, which could make it easier for the financial industry to work with cannabis companies. Among other cannabis stocks, shares of Tilray Brands Inc.
    TLRY,
    +2.03%

    gained 2.4%, of Cronos Group Inc. climbed 6.0% and of Aurora Cannabis Inc.
    ACB,
    +14.75%

    jumped 12.5%. The AdvisorShares Pure US Cannabis ETF
    MSOS,
    +3.88%

    rose 7.5% on volume of 13.9 million shares, compared with the full-day average of about 5.6 million shares, while the S&P 500
    SPX,
    +0.14%

    slipped 0.1%. The cannabis ETF has soared 77% over the past seven sessions.

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  • Want companies to lower their prices? Stop buying stuff from them.

    Want companies to lower their prices? Stop buying stuff from them.

    The thing that will make companies lower prices is if consumers stop complaining about paying more for the things they need and want, and actually start refusing to buy them.

    As the U.S. corporate earnings-reporting season progresses, with earnings from major retailers Walmart Inc.
    WMT,
    +0.59%
    ,
    Target Corp.
    TGT,
    +0.10%

    and Home Depot Inc.
    HD,
    +0.52%

    on tap next week, investors can get a ground-floor view of how consumer demand may have been hurt, or not, by higher prices, and what the companies plan to do, or not do, about it.

    This dynamic of how consumers adjust their spending habits when prices change is referred to by economists as the price elasticity of demand.

    For companies to cut prices, ‘you have to have the consumer go on strike, and they’re not there yet.’


    — Jamie Cox, Harris Financial Group

    Those who trust companies will choose to ratchet down prices on their own, or at least not raise them because the rise in input costs has been slowing, haven’t been listening to what the many companies have told analysts on their post-earnings-report conference calls.

    Read: U.S. inflation eases again, PCE shows. Prices rise at slowest pace in almost two years.

    Kraft Heinz Co.
    KHC,
    +0.47%

    acknowledged after its second-quarter report that its relatively higher prices have hurt demand, but not by enough for the food and condiments company to consider cutting prices.

    Colgate-Palmolive Co.
    CL,
    +0.81%

    said it will continue to raise prices, even as inflation slows and selling volume declines, as the consumer-products company continues to be laser focused on boosting margins and profits.

    And while PepsiCo Inc.
    PEP,
    +0.16%

    was worried that elasticities would increase, given how its lower-income customers were being particularly pressured by inflation, the beverage and snack giant reported strong results as it witnessed “better elasticities” in most of the markets in which it operated.

    “Obviously, there is still carryover pricing, and I don’t think we’ll do anything different than our normal cycles on pricing in the balance of the year,” PepsiCo Chief Financial Officer Hugh Johnston told analysts, according to an AlphaSense transcript.

    Basically, as MarketWatch has reported, so-called greedflation is alive and well.

    Jamie Cox, managing partner for Harris Financial Group, said as long as the job market stays strong, as it is now, corporate greed will continue to pay off.

    “If something is more expensive, and you have a job, you’ll complain about it, but you won’t substitute it for something cheaper,” Cox said. For companies to cut prices, “you have to have the consumer go on strike, and they’re not there yet,” Cox added.

    ‘At some point, people are going to say, “All right — enough.” ’


    — Paul Nolte, Murphy & Sylvest Wealth Management

    The reason elasticity is so important in the current environment is that, as long as consumers continue to pay the higher prices companies are charging, inflation will remain stubbornly high, making it, in turn, more likely that the Federal Reserve will continue to raise interest rates or, at the very least, not lower them.

    But the longer interest rates stay high enough to crimp economic growth, the more likely the stock market will reverse lower as recession fears rise.

    “At some point, people are going to say, ‘All right — enough,’ ” said Paul Nolte, senior wealth manager and market strategist at Murphy & Sylvest Wealth Management. “But we just haven’t seen that yet.”

    What is elasticity?

    Economists use the term “price elasticity of demand” to refer to the way in which consumers adjust their spending habits when prices change.

    “Elasticity tries to measure how much more producers will want to produce if prices rise, and how much more consumers will want to buy if prices fall,” explained Bill Adams, chief economist at Comerica.

    Elasticity often depends on the type of product a company sells.

    For example, consumer-discretionary-goods companies that sell products and services that people want will often experience greater price elasticity than consumer-staples companies that sell things that people need, such as groceries and prescription drugs.

    But even for needs, consumers often still have a choice, as less expensive generic, or private-label, alternatives may be available.

    Andre Schulten, chief financial officer of consumer-staples maker Procter & Gamble Co.
    PG,
    +0.58%
    ,
    which recently beat earnings expectations as it continued to raise prices, telling analysts that, while there was “some trading into private label,” the overall market share of private-label products was unchanged for the year.

    As Harris Financial’s Cox said, consumers may be complaining about higher prices, but they aren’t yet desperate enough to stop buying.

    The Federal Reserve’s latest Beige Book economic survey stated that business contacts in some districts had observed a “reluctance” to raise prices as consumers appeared to have grown more sensitive to prices, but other districts reported “solid demand” allowed companies to maintain prices and profitability.

    That’s likely why companies and analysts have become less concerned about price elasticity. Based on a FactSet analysis, mentions of the word “elasticity” in press releases and conference calls of S&P 500 companies
    SPX
    increased as inflation and interest rates started surging in early 2022 through the end of the year.

    With inflation trends softening this year, the Fed took a brief pause in raising rates in June, helping fuel further stock-market gains, before raising rates again in July.

    Mentions of the word elasticity in earnings press releases and conference-call transcripts of S&P 500 companies.


    FactSet

    As the chart shows, “elasticity” popped up in more than 55% of earnings releases and conference calls in mid-2022, but with the second-quarter 2023 earnings-reporting season more than half over, mentions had dropped to about 20%.

    Perhaps that will pick up, as retailers, especially those catering to lower-income customers — recall the PepsiCo comment — assess the demand impact of continued price increases.

    Meanwhile, the branded-foods company Conagra Brands Inc.
    CAG,
    +0.71%
    ,
    whose wide-ranging food brands including Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim, were starting to see the emergence of a different dynamic.

    Chief Executive Sean Connolly said consumers were shifting behavior in some categories as prices remained high. Rather than trade down to lower-priced alternatives, he noticed some consumers buying fewer items overall, “more of a hunkering down than a trading down.”

    That’s exactly the kind of consumer behavior that is needed, if companies are to stop feeding into the greedflation phenomenon and to start pulling back on prices.

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  • Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

    Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

    What’s going on with frozen fruit and vegetables?

    Food prices rose 0.2% on the month in July after remaining unchanged in June, and they rose 4.9% on the year, while the cost of food at home rose 3.6% on the year, government data released Thursday showed. Prices of fresh fruits and vegetables rose just 1.2% year over year.

    However, there were some big — even alarming — outliers: Frozen fruit and vegetable prices increased by 11.8% in July over last year, frozen vegetable prices rose 17.1% and frozen noncarbonated juice and drink prices rose 16.3%.

    Those price rises are at odds with overall inflation figures. U.S. consumer prices rose to 3.2% in July from 3% in the prior month, the Bureau of Labor Statistics said this week. It was the first increase in 13 months.  

    Why have the prices of frozen fruits and vegetables shot up over the past 12 months, while the cost of fresh fruits and vegetables has increased so little? 

    Climate change and extreme weather conditions — from heavy rainfall to drought, particularly in California — have led to big problems for farmers. This has been compounded by issues related to the war in Ukraine and an ongoing increase in the cost of labor, experts said.

    As a result, a large proportion of the fruits and vegetables grown were destined to be sold as fresh produce — which led to a shortage of ingredients for frozen goods, said Brad Rubin, sector manager at Wells Fargo Agri-Food Institute. “Because of the late crop, lots of produce is being pushed to the fresh market to keep up with demand,” he said.

    California weather

    California has experienced some drastic weather conditions over the last 12 months. Some 78 trillion gallons of water fell in California during winter 2022 and early spring 2023, according to data from the National Weather Service, delaying planting. And all that snow and rain was followed by a months-long drought in the region.

    What happens in California is felt by consumers across the country. 

    “California produces nearly half of U.S.-grown fruits, nuts and vegetables,” according to estimates from the Sciences College of Agriculture, Food & Environmental Sciences at California Polytechnic State University in San Luis Obispo. “California is the only state in the U.S. to export the following commodities: almonds, artichokes, dates, dried plums, figs, garlic, kiwifruit, olives, pistachios, raisins and walnuts,” it says.

    The subsequent price rises hit ingredients like strawberries and raspberries especially hard, Rubin added. Inventories of frozen berries are “near five-year lows” after winter storms in Watsonville flooded agricultural fields, damaging and delaying the strawberry crop. Most of the strawberries in the U.S. are grown in California. 

    Labor costs

    Frozen fruits and vegetables have a longer supply chain than fresh produce, which can make them more vulnerable to disruptions in inventory, experts say. Rising energy prices are also pushing up the cost of cold storage. 

    In addition to those issues, U.S. farmers are dealing with increased labor costs and fewer migrant workers, partly due to changes in government policies and the closure of borders during the COVID-19 pandemic, according to a February 2023 report from the Federal Reserve Bank of San Francisco. 

    “Immigration has traditionally provided an important contribution to the U.S. labor force,” the report said. “The flow of immigrants into the United States began to slow in 2017 due to various government policies, then declined further due to border closures in 2020-21 associated with the COVID-19 pandemic. This decline in immigration has had a notable effect on the share of immigrants in the U.S. labor force.”

    Russia’s invasion of Ukraine also continues to affect agricultural production in the U.S., said Curt Covington, senior director of institutional business at AgAmerica Lending, a financial-services company providing agricultural loans. Because the war disrupted supplies of commodities like wheat and corn — also pushing up prices for those goods — farmers have been prioritizing planting those crops over vegetables. 

    “These escalating frozen-vegetable prices present a challenge for farmers as they grapple with increased production costs and labor pressures,” and that presents a long-term challenge for farmers, “potentially impacting their profitability,” Covington said. 

    All of these factors — from international supply chains to extreme weather conditions — will have an effect on the cost of frozen goods in U.S. supermarkets. Ultimately, experts said, consumers will end up paying the price.

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  • Canadian pot company Tilray is buying 8 beer and beverage brands from AB InBev

    Canadian pot company Tilray is buying 8 beer and beverage brands from AB InBev

    Canadian cannabis producer Tilray Brands Inc.
    TLRY,
    -3.48%

    on Monday said it had agreed to buy eight beer and drink brands from Anheuser-Busch InBev
    BUD,
    -0.09%

    — including Shock Top, Redhook Brewery and Widmer Brothers Brewing. The other five brands are Breckenridge Brewery, Blue Point Brewing Co., 10 Barrel Brewing Co., Square Mile Cider Co. and HiBall Energy. The deal, which includes related staff and breweries, is expected is expected to close this year. Tilray said it expects to pay in cash to complete the deal. The purchase price wasn’t disclosed in a release. The deal follows other efforts by Tilray to expand into alcohol, amid heavy competition in Canada’s legal cannabis industry and stalled federal reform in the U.S. Shares rose 2.7% after hours on Monday.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as inflation readings have come down and as some acknowledge that their input costs are falling.

    At the same time, companies continue to emphasize on earnings calls that their customers are showing signs they are weary of higher prices and are shopping more frequently at more stores, while spending less per trip.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs claim outside forces made them gouge consumers, then turn around and give themselves raises and boast of record profits and billions in new investor handouts,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    -1.10%
    ,
    for example, said it raised prices by up to 9% in its latest quarter, after raising them up to 10% the previous quarter and up to 10% in the same quarter in 2022.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If you look back historically, pricing has been a positive contributor to our top-line growth for something like 48 out of the 51 last quarters and again as we strengthen our innovation program even further, that will provide opportunities to continue to benefit from modest pricing,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    The company blew past earnings estimates with adjusted per-share earnings of $1.37, ahead of the $1.32 FactSet consensus, and sales of $20.6 billion, versus the $20 billion FactSet consensus.

    Gross margin increased 380 basis points from a year ago, driven by 340 basis points of pricing benefit and 290 basis points of productivity savings.

    Coca-Cola Co.
    KO,
    -1.51%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.62%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    -1.82%

    raised prices in North America by 10.4 percentage points in the second quarter and raised prices for all developed markets by 12.4 percentage points. That’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -1.05%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” as the company disclosed as the very first bullet point in its release. Campbell raised prices of meals and beverages by 9% and if snacks by 15%, after raising them by 15% and 13%, respectively, in the second quarter.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -0.82%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[W]hile we did lose share in the quarter, as price gaps have stayed wider for longer than we would have liked, we are managing the business for the long term and still generated mid-single-digit top-line growth within the range of what we expected,” Chief Executive Miguel Patricio said.

    The company, parent to brands including Kraft Mac and Cheese, Heinz Ketchup, Jell-O and Lunchables, indicated on the post-earnings conference call with analysts that rather than increasing discounting, or just cutting prices, it will remain focused on protecting margins, which has been allowing it to accelerate investment in the business, particularly in marketing, research and development and technology.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So I would do everything again. I mean we can always go back on price if we think we have to or when we have to. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as inflation readings have come down and as some acknowledge that their input costs are falling.

    At the same time, companies continue to emphasize on earnings calls that their customers are showing signs they are weary of higher prices and are shopping more frequently at more stores, while spending less per trip.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs claim outside forces made them gouge consumers, then turn around and give themselves raises and boast of record profits and billions in new investor handouts,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    +0.18%
    ,
    for example, said it raised prices by up to 9% in its latest quarter, after raising them up to 10% the previous quarter and up to 10% in the same quarter in 2022.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If you look back historically, pricing has been a positive contributor to our top-line growth for something like 48 out of the 51 last quarters and again as we strengthen our innovation program even further, that will provide opportunities to continue to benefit from modest pricing,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    The company blew past earnings estimates with adjusted per-share earnings of $1.37, ahead of the $1.32 FactSet consensus, and sales of $20.6 billion, versus the $20 billion FactSet consensus.

    Gross margin increased 380 basis points from a year ago, driven by 340 basis points of pricing benefit and 290 basis points of productivity savings.

    Coca-Cola Co.
    KO,
    -0.49%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.75%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    +0.09%

    raised prices in North America by 10.4 percentage points in the second quarter and raised prices for all developed markets by 12.4 percentage points. That’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -0.95%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” as the company disclosed as the very first bullet point in its release. Campbell raised prices of meals and beverages by 9% and if snacks by 15%, after raising them by 15% and 13%, respectively, in the second quarter.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -1.75%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[W]hile we did lose share in the quarter, as price gaps have stayed wider for longer than we would have liked, we are managing the business for the long term and still generated mid-single-digit top-line growth within the range of what we expected,” Chief Executive Miguel Patricio said.

    The company, parent to brands including Kraft Mac and Cheese, Heinz Ketchup, Jell-O and Lunchables, indicated on the post-earnings conference call with analysts that rather than increasing discounting, or just cutting prices, it will remain focused on protecting margins, which has been allowing it to accelerate investment in the business, particularly in marketing, research and development and technology.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So I would do everything again. I mean we can always go back on price if we think we have to or when we have to. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • Starbucks sees a big rebound in China, but results fail to impress investors

    Starbucks sees a big rebound in China, but results fail to impress investors

    Shares of Starbucks Corp. fell after hours Tuesday after the coffee chain reported third-quarter same-store sales that missed expectations, despite a big rebound in China.

    The coffee chain reported fiscal third-quarter net income of $1.14 billion, or 99 cents a share, compared with $912.9 million, or 79 cents a share, in the same quarter last year. Adjusted for restructuring and impairment costs, Starbucks earned $1 a share.

    Revenue rose 12.5% to $9.17 billion, compared with $8.15 billion in the prior-year quarter. Same-store sales rose 10% worldwide, with a 7% gain in North America. Those same-store sales jumped 24% internationally, with a 46% gain in China.

    Analysts polled by FactSet expected Starbucks
    SBUX,
    -0.31%

    to report adjusted earnings per share of 95 cents, on revenue of $9.29 billion and same-store sales growth of 11%.

    Operating margins rose to 17.3%, from 15.9% a year ago, with higher prices and productivity offset by greater spending on employee wages and benefits.

    Shares slipped 1.2% after hours on Tuesday. Shares of Starbucks are roughly where they were at the beginning of the year.

    Starbucks executives over the past year have said that amid stubborn inflation, customers see coffee as an affordable luxury worth treating themselves to. But Wall Street has struggled to find a reason to push the stock higher amid questions about trends in North America and slowing same-store sales in the years ahead, as well as China’s uneven economic recovery as it shakes off pandemic restrictions.

    UBS analysts said that demand in the U.S. was likely still “solid.” But they said that the focus would be on demand in China. Quo Vadis analyst John Zolidis, meanwhile, said that along with China, investors had been focused on the chain’s efforts to set up more drive-through locations in the U.S., and any benefits from higher-priced cold drinks and customizable orders.

    The coffee chain also continues to fight with its unionized employees. Bargaining has stalled. Last month, unionized workers accused Starbucks of banning Pride-themed decorations. Starbucks aggressively denied those allegations.

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  • Senate OKs security clearances for people who used marijuana, but House hasn’t signed off

    Senate OKs security clearances for people who used marijuana, but House hasn’t signed off

    The U.S. Senate version of the National Defense Authorization Act (NDAA) that has been approved by a vote of 86 to 11 includes a provision that would prohibit intelligence agencies such as the Central Intelligence Agency (CIA) and the National Security Agency (NSA) from denying security clearance to applicants solely due to their past use of cannabis, according to a statement on the NDAA measure from Sen. Michael Bennet, a Democrat from Colorado. The amendment proposed by  Sen. Ron Wyden, Democrat from Oregon, was co-sponsored by Bennet and Sen. Martin Heinrich, Democrat from New Mexico. The U.S. House of Representatives has passed its own version of the NDAA with amendments from conservative Republicans, so a clash is expected in the fall as the two chambers work to produce a final version of the bill. It’s not yet clear if the security clearance amendment will make it into the final version of the NDAA that will be sent to President Joe Biden for a signature. The cannabis provision was initially reported by Marijuana Moment.

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  • Bud Light sales are still falling, but investors get it at this point. Here’s what Morgan Stanley says they might be missing.

    Bud Light sales are still falling, but investors get it at this point. Here’s what Morgan Stanley says they might be missing.

    Bud Light sales are still falling, as the impact of a boycott against the beer continues to stick. But Morgan Stanley analysts on Thursday said that impact was already reflected into shares of its parent company, Anheuser-Busch InBev, and that AB-InBev’s global footprint and the falling costs of beer ingredients would help sales and margins up ahead even if struggles in the U.S. spill over into next year.

    Morgan Stanley assumed coverage of AB-InBev
    BUD,
    +0.51%

    with an overweight rating, a step up from its prior equal-weight rating. The firm bumped its price target on the stock higher, to $68.50 from $64. Shares of AB-InBev were up 0.4% on Thursday.

    The analysts also said that AB-InBev’s second-quarter results, set for Aug. 2, could be a clarifying moment for investors.

    “While investors are currently sitting on the sidelines, waiting for the company to fully quantify the impact of the Bud Light situation, we see upcoming H1 results as likely timing for such clarification,” the analysts said in a research note.

    “We think ABI shares now price in the U.S. Bud Light challenges, which have stabilised, but not the gross margin recovery and de-leveraging upside into next year,” they added later.

    The conservative-led boycott against Bud Light began in April, after the brand briefly partnered with Dylan Mulvaney, a trans influencer. That anti-trans anger has translated into weeks of sharp declines, generally above 20%, for Bud Light sales. Mulvaney said Bud Light never reached out to her, despite what she said was “more bullying and transphobia than I could have ever imagined” as a result of the partnership and calls for a boycott.

    The fall-off has spread to some of other AB-InBev’s other beer brands, and benefited its rivals. Modelo Especial has recently dethroned Bud Light as the best-selling beer in the U.S.. Constellation Brands Inc.
    STZ,
    +0.47%

    sells Modelo beer in the U.S., after a deal a decade ago to acquire Grupo Modelo’s U.S. beer business from AB-InBev.

    Still, the Morgan Stanley analysts emphasized Anheuser-Busch’s worldwide reach, and said that even a 13.5% drop in U.S. yearly sales — broadly, where things stand in the U.S. now — would only mean a 4% drop for the company’s sales overall. And they said double-digit growth expected elsewhere, in regions like South America and the Asia-Pacific, would drive organic sales growth of 6% for the company overall in its fiscal 2023. They also said a “wind-back” on commodity costs and sales incentives to U.S. beer sellers would help margins up ahead.

    Still, they didn’t expect much of a break for sales trends in the U.S. They said they expected the 13.5% drop in U.S. sales to ease to a 12% drop in AB-InBev’s fiscal 2024.

    Overall, however, the analysts were upbeat on beer sales and profits for next year. Falling ingredient costs would help brewers overall. A pandemic-era jump in U.S. demand for spirits — or hard liquor like gin, Scotch and vodka — had now “normalized,” they said.

    Shares of Anhueser-Busch InBev are down 1.4% so far this year. By comparison, the S&P 500 Index
    SPX,
    -0.68%

    is up 18.9% over that period.

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